No matter what you do through this recession, you’re most likely going to have to deal with another some time in the future. So, it might not be a bad idea to learn a few economist tricks for prediction a recession to make sure that you’re prepared when that happens, as it most likely will.
There are a number of formulas and charts you can look at to gain an accurate picture of the economy, but there are really only two primary ways you can easily use to predict a recession on the horizon without having to be a financial analyst.
Stocks: Typically a recession is preceded by a significant downturn in the stock market. Interestingly, however, this isn’t guaranteed. Since the 1940’s, there have been several points where the stock market took an overall sustained downturn of ten percent or more, only to not be followed by a recession. Stocks are, of course, unusually abstract as far as economics analysis goes, as there is no actual value being traded, but rather, a sort of idea of value being traded back and forth between investors. That said, you can usually at least predict a tightening of belts by way of watching the stock market.
Three Month Change in Unemployment Rate: If the job market takes a sudden downturn, as in, one point five percent over the course of three months or less, then this may well precede a recession. Other factors may be at play, but in general, the employment rate only goes down in such a marked fashion on the eve of a recession. Find Job Recession is a chant heard outside some unemployment offices and in pooolitical rallies.